Friday, September 21, 2012

Canada's housing bubble bursting 'right now' - CBC story‏

Robert Shiller of Yale University predicted the US housing crash in 2005, a year before it happened. He is quoted by the CBC as saying that he is worried that we're now experiencing a slow motion version of the US crash.

The same article cites Don Drummond, a former chief economist at TD bank as saying the Canadian bubble is bursting right now. You can read the whole story here: 

Timing the market is difficult at the best of times, if not entirely impossible. That's because economics is as much about psychology as it is about number crunching. So long as people are convinced that real estate prices are going to keep climbing, they'll dive into the housing market even while bitching that prices are insane. Then the worm turns and buyers choose to sit on the sidelines and wait out lower prices.

Here in Quebec City I drive past condos where for sale signs are sprining up like dandelions. I don't doubt that many of the units were built pre-contruction by speculators looking to make a quick buck. That's life, when you play the market...any market, there are risks. Given Canada's demographic make up with so many baby boomers heading into their depends years I'm thinking it might be another 20 years before we see real estate providing good value as a vehicle for investment.

Warnings of a Canadian housing bubble have been around for at least the past couple of years, but its been on the fringes with most government types and so called market experts calling for contiued price appreciation or the so called 'soft landing'. 

By the time experts weigh in with bearish forecasts its likely too late for those who bought in over the past few years, paying top dollar and mortgaging themselves to the hilt.

Sometimes its worth reading pathetic little blogs.  

No comments: